6 THE INTERNATIONAL ECONOMY SPRING 2005

Who IsBehind Bush Economic

Policy? Check out the Ward Room

of the White House.

Every Wednesday, some eight or nine officials meet in theWard Room of the White House to discuss economic pol-icy. The group is collegial in the extreme with not muchdisagreement about anything, but no great decisions aremade or even pondered. Most of the policies have been setlong ago, and the burden of the talk is how to implementthem—especially how to sell the program to the nation andCongress.

There are a surprisingly large number of officials present. In some pastadministrations, such meetings have been restricted to a “triumvirate” (headsof the Treasury, Budget and Council of Economic Advisers). Officials attendingalso are unexpectedly diverse. They range from the Vice President of the UnitedStates to Cabinet members to middle-level staffers.

Vice President Cheney usually attends, and so does his chief-of-staff,Scooter Libby, and his economic aide, Keith Hennessy. White House Chief-of-Staff Andrew Card is not usually there, but newly anointed Deputy Chief-of-StaffKarl Rove is a recent addition. Regularly attending Cabinet members includeSecretary of the Treasury John Snow, newly appointed Secretary of CommerceCarlos Gutierrez and Office of Management and Budget Director Josh Bolten.

One former Bush Administration official, who would not be quoted byname, made this criticism of the Wednesday meetings. “It’s the wrong people in

Robert D. Novak is a nationally syndicated columnist.

B Y R O B E R T D . N O VA K

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SPRING 2005 THE INTERNATIONAL ECONOMY 7

The Vice President haslittle to say in Cabinetmeetings, but at the

Wednesday economic ses-sions, he is described as pos-itively garrulous.

Richard Cheney, noeconomics theoretician, hasshifted his economic ideol-ogy to fit whatever his cur-rent political situation mightbe. He does not offer any

innovations, but nobody challenges what he says. Hespeaks with the authority of not only being Bush’s choseninstrument but also as a close friend of Federal ReserveChairman Alan Greenspan. That should not be construed,however, as giving Greenspan a backhanded voice in thedetails of the Administration’s economic planning.

The hand of Bush’spolitical adviser ineconomic policymak-

ing was always present buthidden. Now it is out in theopen. Karl Rove is no econo-mist but is a policy wonk ofthe first order and understandsthe details of the issues.

He has less to say thanCheney and what he saysusually involves the inter-section of politics and policy.

The head of theNational EconomicCouncil is a new

member of the economicteam and is an important one,in no small part because ofhis relationship with GeorgeW. Bush (his classmate andfriend at Harvard BusinessSchool). Al Hubbard’s pri-mary mission is selling theBush Social Security reform.

Josh Bolten is an astutenavigator of Washing-ton’s waters. Bolten gen-

erally keeps below the radar.Not nearly as political as pre-decessor Mitch Daniels (nowGovernor of Indiana), Boltenhas avoided Daniels’s noisystruggles with Congressionalappropriators. He is animplementer rather than aninnovator.

Just moved from theFederal Reserve Boardto chair the Council of

Economic Advisers, BenBernanke is an unknownquantity to his new col-leagues. His performance atthe CEA may go far to deter-mine whether he makes aquick trip back to the Fednext year as the retiringGreenspan’s replacement.

Bush Team MVPs

VP Richard Cheney

Al Hubbard, Director,National Economic

Council

Ben Bernanke, Chair, Council of

Economic Advisers

Karl Rove, Deputy Chief of Staff

An able man with noenemies who maybe in the wrong job,

John Snow’s biggest burdenis being the successor of PaulO’Neill, one of the truly greatdisasters in Treasury history.

In addition to publicnon-support for the Bush taxcuts, O’Neill proved ruinousto employee morale at theTreasury. The last straw wasO’Neill’s African trip with thesinger Bono. Rove wanted aquick replacement before the 2004 campaign got going, andCSX railroad chief Snow got the job. While Snow hadWashington experience, he was more of a corporate lobby-ist than a financier, administrator or economist planner.Clearly, the President should have known he was not get-ting a Treasury Secretary in the heroic mold of GeorgeSchultz, James Baker, or Robert Rubin.

John Snow, U.S. Treasury Secretary

Josh Bolten, OMB Director

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the wrong place. There are too many people at the table.It should be at the Treasury in the Secretary’s office withthe Secretary in charge.”

But John Snow is just one of many at the Wednesdaytable, and that reflects the downgrading—which seemsmore accidental than conscious—of the Treasury inPresident George W. Bush’s administration. With manykey posts in the department left unfilled for much of thelast year and Snow largely reduced to a salesman’s role,Treasury is not the government’s economic power housethat it has been traditionally.

When Snow arrived at the Treasury in 2000, he inher-ited the broad strategies of how to deal with SocialSecurity, taxes, and international currency questions. Thathelps explain his role that is diminished well below thetraditional dimensions of the office, and it also is instruc-tive about the roles of his colleagues.

Within that reduced scope, these are the major Busheconomic players:

Dick Cheney. The Vice President has little to say inCabinet meetings and has been known to remain silentduring the full length of luncheons for RepublicanSenators that he attends weekly. But at the Wednesdayeconomic sessions, he is described as positively garru-lous—speaking early and often.

Cheney, whose uncompleted master’s degree was inpolitical science, is no economics theoretician and hasshifted his economic ideology to fit whatever his currentpolitical situation might be. As President Gerald Ford’schief-of-staff, he opposed tax reductions. As aCongressman from Wyoming, he was not part of the sup-ply side bloc but voted for the Kemp-Roth tax cut. AsGeorge W. Bush’s Vice President, he is a forceful enforcerof what the President wants.

Cheney does not offer any innovations, but nobodychallenges what he says. He speaks on Wednesdays with

the authority of not only being Bush’s choseninstrument but also as a close friend and long-agocolleague (in Ford Administration days) of FederalReserve Chairman Alan Greenspan. That shouldnot be construed, however, as giving Greenspan abackhanded voice in the details of theAdministration’s economic planning.

Karl Rove. The hand of Bush’s political adviser ineconomic policymaking was always present butwas hidden. Now that he has become White HouseDeputy Chief-of-Staff for policy, it is out in theopen. Rove, who is about two semesters short ofhis bachelor’s degree in political science, is noeconomist but is a policy wonk of the first order

and understands the details of the issues.He has less to say than Cheney on Wednesdays, and

what he says usually involves the intersection of politicsand policy. However, nobody doubts the authority of thePresident’s principal adviser on all questions, includingwho will hold the positions that his colleagues now fill.

Al Hubbard. The head of the National Economic Councilis a new member of the economic team and is an impor-tant one, in no small part because of his relationship withGeorge W. Bush (his classmate and friend at HarvardBusiness School). Businessman Hubbard’s congenialIndiana style appears somewhere between his two prede-cessors—economist Lawrence Lindsey, who was viewedby the White House as talking too much, and investmentbanker Stephen Friedman, whom the White House com-plained just disappeared in the job.

Hubbard’s primary mission is selling the Bush SocialSecurity reform, and that is why he says getting entitle-

Before the 2004 election, nasty leaksstarted coming from the White Housethat Snow had better pack his bags forthe second term. Former Senator PhilGramm of Texas, now an investmentbanker, was considered. However, itwas determined that Gramm was sostrong and so well qualified that hewould have been difficult to handle.

The problem will come if

the economic news, at home or abroad,

turns sour. The band that meets every

Wednesday may not be up

to economic crisis management.

Former Senator Phil Gramm

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ments under control—starting with Social Security—isAmerica’s foremost economic problem.

He spends a lot of time on Capitol Hill, and gets mixedreviews from the lawmakers. Some think he is a countrifiedlightweight. But a majority feels he is the Administration’smost cogent economic voice.

Josh Bolten. The OMB director is an astute navigator ofWashington’s waters in several government posts, includ-ing Deputy Chief-of-Staff for policy before taking theBudget post. He is out of the cookie-cutter stereotypedBush official: A Jewish native of Washington and a bach-elor who just moved into a big suburban home, he drives aHarley Davidson motorcycle and is a musician.

Bolten generally keeps below the radar, effectingBush’s deepest budget cuts so far without creating afirestorm. Not nearly as political as predecessor MitchDaniels (now Governor of Indiana), Bolten has avoidedDaniels’s noisy struggles with Congressional appropria-tors. He is an implementer rather than an innovator and isunlikely to push for daring new turns in policy.

Ben Bernanke. Just moved from the Federal Reserve Boardto chair the Council of Economic Advisers (CEA), he is anunknown quantity to his new colleagues. At the Fed, hesometimes disagreed with Greenspan on central bank pol-icy. But those questions are beyond the purview of Bush’seconomic team. His performance at the CEA may go far indetermining whether he makes a quick trip back to the Fednext year as the retiring Greenspan’s replacement.

John Snow. This is a sad story that cannot be blamed onSnow, an able man with no enemies who may be in thewrong job.

His biggest burden is being the successor as Secretaryof Paul O’Neill, one of the truly great disasters in Treasuryhistory. Cheney and Secretary of Defense DonaldRumsfeld, who were close colleagues of O’Neill when hewas a bright young civil servant in Nixon-Ford days, con-vinced Bush that conservative criticism of O’Neill wasmisguided.

In addition to public non-support for the Bush tax cuts,former ALCOA chief executive O’Neill proved ruinous toemployee morale at the Treasury. Valued senior civil ser-vants reacted to O’Neill’s edicts by leaving. The last strawwas O’Neill’s African trip with the singer Bono. Rovewanted a quick replacement before the 2004 campaign gotgoing in earnest, and CSX railroad chief Snow got the job.

While Snow had Washington experience (at theTransportation Department), he was more of a corporatelobbyist than a financier, administrator, or economist plan-ner. Clearly, the President should have known he was not

getting a Treasury Secretary in the heroic mold of GeorgeSchultz, James Baker, or Robert Rubin.

Nevertheless, before the 2004 election, nasty leaksstarted coming from the White House that Snow had bet-

ter pack his bags for the second term. Former Senator PhilGramm of Texas, now an investment banker, was consid-ered. However, it was determined that Gramm was sostrong and so well qualified that he would have been diffi-cult to handle. Several corporate executives were consid-ered, but each looked like another Snow at best or anotherO’Neill at worst.

Snow stayed, and has worked hard at his unpleasanttasks of dealing with Congress on Social Security andChina on currency manipulation. He was dealt that difficulthand and told to play it the best he can.

His task has been made all the more difficult by theunprecedented vacancies in top Treasury positions duringhis tenure—including Deputy Secretary. The vacancy per-sisted so long because Bush insisted on a woman for thejob. He finally decided on Susan Schwab, who had exten-sive experience as an international trade expert in Congressand at the Commerce Department. But she failed to clearthe Senate confirmation hurdle because of problems regard-ing her financial disclosure.

Since then, the Deputy Secretary’s job has been vacantmore than it has been filled, as have several of the AssistantSecretary positions (Robert Kimmitt, a former Bush I offi-cial, was recently nominated for Deputy Secretary). Thatconnotes less White House contempt for the Treasury thana combination of administrative incompetence and the tor-tuous clearance process for new government appointments.

The absence of a strong man guiding theAdministration’s policy probably does not have much todo with whether the President succeeds or fails in his cur-rent primary mission of reforming Social Security. It maynot even impact of international monetary policy, underpresent conditions.

The problem will come if the economic news, at homeor abroad, turns sour in George W. Bush’s second term.The band that meets every Wednesday may not be up toeconomic crisis management, and a new power alignmentwill have to be arranged. ◆

The Deputy Secretary’s job has been

vacant more than it has been filled.